(WAVE) – Filling in those financial gaps and tossing out bad budget habits can change your life and your savings. It all starts the day you are born.
“As parents, in particular, we’re failing an entire generation not teaching basic finance,” Mark Lampkin of Lamkin Wealth management stressed to WAVE 3 News. “Our school system fails miserably at teaching our children about how to balance a checkbook. How to do a budget. How to understand compound interest.”
It's never too early in life to learn to save, share, and spend wisely.
“You never give an allowance for free,” Lamkin emphasized. “You never fund your teenager. You make them work for their money.”
Even as a child it is important to begin smart budget habits by saving ten percent of your allowance and also finding a way to help your community by sharing part of your allowance or paycheck or giving time to a cause that is dear to you.
It may also sound strange to start thinking about retirement in the very first financial phase of life, but time is a powerful ally when it comes to helping you grow your investments.
“First job, day one, as soon as you're eligible to, participate in that 401k,” Lamkin proclaimed. “Ten percent is the minimum for men. I teach 15 percent for women. Women live longer than men and because of that longevity they need more money to retire on.”
More than likely, your first job won’t be your last job.
“Historically, you used to work at the same job forever,” Lamkin said with a laugh.
When you move to your next place of employment, it is wise to move your money, too.
“You can always roll that 401k to the next 401k at your next job,” Lamkin stressed. “You never leave your old 401k. No one’s going to manage that. You don't know when there's fund changes. You don't know what fees you’re paying.”
Marriage is another important financial phase in life. Before you walk down the aisle, you need to go over finances.
“You need to have a real strong conversation,” Lamkin stressed with a smile. “The demons need to come out if they're there. If I marry you, and I find out you have $50,000 in credit card debt, $100,000 in student loans and a credit score of 300, I'm going to be upset.”
If you want to feel financially comfortable as a couple, you need to start talking.
“Money is one of the leading causes of divorce,” Lamkin shared.
Unfortunately for many, divorce is another financial phase in life. The more information and guidance you have during the divorce process, the less headaches and uncertainty in the long run.
“When it comes to divorce and money, there is no easy answer,” Lamkin explained.
Financial documents are key: Income tax returns, paycheck stubs, W-2 forms, financial records, investment account statements, employment records, pension information, retirement savings accounts, and social security statements will tell the story of what funds are part of your partner’s financial portfolio.
“You can see what's actually there and start the conversation there,” he proclaimed.
It's almost impossible to be emotionally prepared for the death of a spouse, but financial preparation starts early in the relationship. For couples who have taken the time to talk about contingencies after the death of one partner, the financial transition may be a little easier.
“Death of a spouse really comes down to planning,” Lamkin stated. “Both spouses should be involved in those money discussions and often times it just doesn't happen.”
If life, health and good planning come together when you will find yourself in what's called the golden years: Retirement.
Lamkin explained you must ask yourself, “How much money are you going to need to live the retirement of your dreams and enrich the world with your legacy?”
According to the Federal Reserve, 26 percent of non-retirees say they have nothing saved for retirement.
“The last stage of money is distribution,” Lamkin shared. “It is your legacy. You need to be very clear where you want your money to go. Because if you're not, there's some unknown judge that's going to determine it for you, and if you say you're leaving everything half between my two children, it's not good enough. Because more times than not those two children are gonna fight. You need to spell it out, and you need to be very specific.”
No matter what your net worth, it is important to have a basic estate plan in place. It may seem overwhelming to start the process, but in the end, it will add up to a very successful life in any financial phase you may find yourself in.
Below are links to help you figure out a daily budget or what you need for retirement.